A time capsule of the greatest financial mania in the history of mankind, told in real-time by regular folks and patriots. May future generations better understand the madness of crowds, and how power and money corrupt.

October 13, 2008

121 comments:

Remember what happened after the last bailouts that were supposed to save the markets? Temporary euphoria then everyone comes back down to earth and remembers the problems that caused them to fall still exist and we go back down. This will be no different.

Notice the brown stuff running down the G7's legs. These guys are scared out-of-their-heads! Why didn't we think of nationalizing the banks earlier? Oh, that's right that is what happened in NAZI Germany and Facist Italy. When this doesn't work they will inject money directly into your bank account. When that doesn't work there will always be the "manta from heaven" approach. It won't come. Then we choose a uniform general to make the trains run on time. Then we find a scape-goat like an ethnic minority or perhaps even a politcal party and we euthanize them to solve "our problem". Finaly, there is always Thunderdome! "Two men enter one man leaves!"

Okay okay ... I hope we have learned our lessons so this won't happen.

So if the taxpayer is going to guarantee all the bank debt, does that include the exposure on the credit default swaps as well? Becuase technically, those swaps aren't legally considered debt by the gov't.

If we are guaranteeing those swaps (and I think England is doing it implicitly with the injection into RBS), then the US is essentially doubling down (or quintupling down) on this whole mess.

For all this talk of transparency, they still haven't said that they will force the banks to open up their tier 3 assets/liabilities to the public!

I'm really starting to think that the world's leaders have figured out that either they prevent all these loans from defaulting or the entire system will go down regardless of their guarantees.

Seriously, why the hell can't we just nationalize the assets of the bankrupt banks, insure their depositors, and let the derivatives holders suffer the consequences of doing inadequate analysis of counterparty risk? It doesn't seem so complicated.

The only thing I can think of is that the holders of these instruments must be banks in developing countries that only have a few banks - Mexico, Thailand ect. where letting the CDSs fail would completely destroy an entire economy. But if that's it, just say it!!!

Going Global really worked out great . A bunch of slave labor countries made a bunch of cheap crap for Americans and the richer countries bought our excessive debt .Emerging markets were suppose to carry the stock market to the moon .

Interesting that talking heads of any merit are calling for getting rid of the bought off Politicians .Interesting how the Paulson Plan is changing every minute . When is he going to ask for another scream "fire " injection of taxpayers funds the USA doesn't even have.

Get the corrupt people out of power fast folks .

Stop trading ,let Wall Street stagnate . Wall Street only uses other peoples money to pad their big fat pockets. Stop buying cheap foreign goods ,stop dealing with the crooks and demand that they are brought to Justice .Clean house ,these are not the people who should be running the show .

good ole days again. guy on cmbc saying buy stocks now p/e ratios dont matter anymore the market is to cheap to pass up. sounds like 1999 all over again. BULL I think s/p 550 will bottom around 650 or lower...

I would agree...dead cat bounce aka suckers' rally.Nationalizing banks is not the way to go, but then again, the elites are 'changing' the rules. What can we do? If this 'rally' keeps going through the day and maybe even tomorrow...the MSM will be given the pom poms and you will start hearing about 'support' having been established and that everything should be 'ok'. Nevermind that the IMF stated that there's a 'serious' risk for financial meltdown, etc etc.

Smoke and mirrors. I'm just spooked that the 'controlled chaos' that we have been seeing might abruptly end...then we'll see panic...

The fault for this entire housing mess lies with failed liberal economic policies that benefits the poor minorities. While working class whites pay their mortgages on time, do not get into debt and honor their agreements, millions of poor non-working class minorities do the opposite.

Hey Keith you keep predicting the end of the world yet it never happens. I can recall so many times in which you say "ok, the coming meltdown is underway", etc.. and it NEVER happens.

How bad can things get? Really? Even if we have a Great Depression, we will get through this. This too shall pass. Either you are a strong person or a weak one.

My brother who is a Fucked Saver is so angry, upset, full of rage and nervous. Boy, you Fucked Savers who sacrificed, toiled, were frugal, etc... are really fucked. If we have a hperinflation, then you folks are FUCKED. If we have a deflation, then you will be ok. Time will only tell.

Light volume rally and the sun came out. You married guys stuck in your unsupportable mortgages are looking for any port in a storm. I hope you enjoyed that $400,000 monthly BJ you got last night from your overweight wife after the football game. Wait till when she hits 40. She will divorce you, get a tummy tuck and boob job with the child support and then she will move to Sedona thinking she will sell her farts to old people to cure their arthritus. By-the-way ... studies show that there is a 10% chance one of those kids is not yours. Good luck on all that :).

My tin hat looks nice :). I'll raise my kids in my rental paying cash for my cars and my vacations thanks ... now that the housingpanic is in full swing when is the marriagepanic blog going to start?

Buy stock in divorce lawyers if you can. The number of divorces will parallel the forclosure rate.

Does anyone know how to get shit stains out of the old underbritches?I am freaking out.My wife is about to leave me and I'm broke.anyone have a job for the old guy?I sold into the panic last week.looks like I really blew it once again.

So tempting to sell - though at the buy price I paid the dividend was 35%, which is insane. At some point these things are going to go to the moon as the US dollar collapses, don't want to be out at that point.

I woke up this morning and stated trading and am up all over. This is after I called a whopper Rally in the Oct 12 end of the world thread. Not back to normal but back to making $$$. If you missed this rally you missed the bottom...To bad..

Life does not stop during a depression. All the dopes pointing out i-pod sales and sports attendance are simply hoping that enough denial will fix things, its the W approach to a problem.We are at the rim of a deflationary toilet bowl. The very best we can hope for is a decade of hopeless stagflation.When the 4 years of McCain are over we will be talking about McJobs(the new CCC), McFoodstamps and the McDollar. God help us if McCain crokes in the mean time.

Gold down and the dollar down. Now thats interesting. They're going to do just about anything to save the stock market. Hillarious. This is not going to last.

What is the point of companies if the socialist government can give your competitor a wad of cash at your expense? Fake markets. Fake markets. Or a foreign government? I guess that is why they need to nationalize the important stuff because its the fallacy of the "global" market.

Not voting in the charade election. Not participating the fake market.

I think the stock market may end up a 100 or so by the end of the day, and may stabilize over the next couple of weeks only to go down steadily for several months after the election. Unfortunately, the measures wont stop the problem, and the money being poured in means that we will likely end up with high prices and few jobs. I'm not buying stocks; I sold out early in January. I am, however, looking at buying more rental property; the p/e ratio is beginning to come into balance out where I am, and I expect the prices of real goods to soar.

Sure thing trader Bob. Get back to us in three months and we'll see how well your investment "strategy" has paid off. Nothing changed since last Friday, not a damn thing, other than central banks around the world handing fiat money out like candy on Halloween. If you think that is a long-term solution then you need to have your head examined.

Weimar Germany, Brazil, and Argentina all saw their stock market indexes soar as they fell into the buzz saw of inflation then hyperinflation. The investors in those economies did well, didn't they?

My brother who is a Fucked Saver is so angry, upset, full of rage and nervous. Boy, you Fucked Savers who sacrificed, toiled, were frugal, etc... are really fucked.

He's right sacrifice, hard work and saving.

Makes you an Idiot and the civilization you live in dead.

Raise your hand if you think this can last.

The anger is just beginning. Those who financed Warren Buffet lifestyles on HELOC and now expect the rest of us to bail them out will be held to account. Pimco's Bill Gross says that we should raze all of the empty McMansions and just start over. Voila housing oversupply over.

I believe we should raze the occupied McMansions of those who didn't really have the money to be there in the first place and then issue Section 8 vouchers for them to live off the government in the projects. If they are going to live at taxpayer expense then they need to live in Section 8 Housing.

A friend of mine emailed me today asking me if I know anyone looking for work. His company can't find enough people and they had to cancel a contract because of it. His company does ERP consulting and his consultants earn well into the six figures.

On the heels of the worst week in history, the prevailing wisdom on Wall Street is the stock market is now cheap, especially relative to Treasuries and most especially for long-term investors,

With the S&P trading at 13 times expected 2009 earnings and 17.2 times on a trailing P/E basis, "buy the dip" is the mantra from many observers:

* "The sell-off has gone much too far and stocks are poised to rally powerfully if the downturn is less severe than investors," according to The New York Times. * The "Ben Graham P/E" - which divides the price of stocks by their inflation-adjusted net earnings average for the past 10 years - is the lowest its been since 1989, The WSJ reports. * Even typically skeptical observers like Barron's Alan Abelson and FusionIQ's Barry Ritholtz were writing this weekend about the potential for a short-term market bounce of between 20%-30%.

WASHINGTON (Reuters) - The financial fallout outside the United States from Lehman Brothers Holdings' bankruptcy has been about $300 billion, the head of Germany's financial regulator said on Monday.

"We're still licking the wounds of Lehman," said Jochen Sanio, president of the German Federal Financial Supervisory Authority, at an international banking conference. "It caused international damage of $300 billion outside the U.S."

The TED spread, the difference between what the U.S. government and banks pay for three-month dollars, narrowed only marginally 7 basis points to 457 basis points. In Jan 25, 2007 TED SPREAD was only 0.225 basis points.

The dollar Libor-OIS spread, a gauge of demand for cash, narrowed only marginally 4 basis points to 360 basis points. It was at 105 basis points on Sept. 15. The spread was 24 basis points on Jan. 24.

Libor, set by 16 banks in a survey conducted by the BBA each day in London, determines rates on $360 trillion of financial products worldwide, from home loans to derivatives. Member banks provide estimates on how much it would cost to borrow in 10 currencies for terms between one day and a year.

It does not pay to be a perma-bull or a perma-bear with ANYTHING. Not stocks, not houses, not currencies, not anything.

Stubborn people get slaughtered. Just like the people who thought home prices would always go up.

Oh and who arbitrarily says it's time to stop being a perma-bear when you've been a perma-bear for the last how many years?

There has been a lot of "action" by the central banks of the world but the question we should be asking is will any of this be more effective than the liquidity injections of the Fed over the last year?

I see comments from a few here on P/E's and wonder if they really know what they're talking about. The current P/E on the SP500 (after todays 600 point gain) is roughly 12. Horrible corporate earnings will send the P/E on the SP500 even higher, perhaps back to 14 or 15 soon. I see no bargains here, and would argue that the P/E's are still way too high. I'm a buyer when the SP500 P/E reaches 8, and in this economic environment that day will come, mark my words. Until then, expect many fake rallies like today. Dumb money always thinking we hit another bottom.

And that is exactly what has been going wrong with the Americano's mentality. Always thinking about buying, spending, slurping, debauching, cheating, lying, plotting, etc... Rarely or never in the Americano's life there exists a moment, even a fleeting one, that holds the mantra of living a simple life with hard work, honesty, and uphold one's self-respect with honor. By now the whole outside world has known what beast lurks behind that lying face of the Americano...

#####

--So, is the Americano toasted yet ? And if not, when do you people, Joe and Jane of the SHRUB's Ass-Head Clan, think the Americano will be toasted ? Will they be toasted lightly as a marshmellow or juicely as a snapper turtle skewered on a stick from head to ass all sizzling nicely, fat popping, juices dripping over a bed of red hot charcoal fire ?--

The Americano nation and its pitiful occupants's fate has entered a dark age, an ominous age filled with peril and uncertainty. An age of unimaginable stench emanating from the fart of the Housing Bubble. Who do you have to blame but yourself when you bough a $700K house on a $40K annual salary as a low-life telemarketer, a StarBuck cashier, a convenient store sales associate, a Best Buy sale clerk, a 30K-Millionaire ? Add in a fat-ass, lazy, couch potatoes, hoity-toity wify, a couple of redneck, foul breath, rotten-teeth kids and you now have a perfect storm for the crashing of not only the Americano economy but the Americano family value as well.

Thus, with all due respect, I will ask you these $69,000 Americano-going-down-the-toilet-dollar-currency questions:

IS THE AMERICANO roasted nicely yet like a grilled snapper turtle ?

WILL THE AMERICANO ever find a shred of WMD in Iraq, the little Islamic nation that the Americano president DUBYA SHRUB and his side-kick PENIS SHOOTER had decided to invade few years ago ?

WILL THE AMERICANO take on the role of the world leader: Free the Tibet Monk"ey" and Invade Red China ?

WHAT IS INSIDE the tummy of most Americano ? Greedy Worm and Sh*ts mostly, perhaps ?

Noodles-I'm just a simple man I don't own much after my divorce but that was by choice...My exposure to the markets is minumum.

I hear "Rally!" then "Chaos!" over and over...Here's what I do know:

1. The poor are many and they are broke and becoming desperate as prices rise

2. We cannot maintain peace without people assuming they will be punished...It's actually smoke and mirrors how we keep order.

3. In times of REAL trouble plenty of murders, rapes and robberies go unpunished...Because of volume and lack of man power.

4. In 3 days without services most large cities will become SCARY.

5. Rich/poor/white/brown/black it won't matter...Crime will affect you...Maybe not you but maybe your mom...Maybe not you but your wife.

6. Money in bad times is great but inflation zooms up all that will matter is basics along with guns and safety.

7. For the ones that think we'll crash over nite...You're probably wrong but it will be a slide into evil times...Slowly things will get worse as people become desperate...5 years from now today will seem like heaven.

Am I a kook for believing that this has now made a one world or Amero monetary system a reality?

Maybe but imagine if I describe the news in the last 3 weeks to someone 1 year ago?

They would have thought I was coo-coo.

Look to the rich or middle class in South Africa/Brazil because we will end up like them.

Onclaves of people usually rich or well off trying to keep the Barbarians at the gate...Hee Hee all you've done is imprison yourself.

This is so strange agreeing with semi-religious and conspiracy kooks but up to this point all roads lead to manipulation of the masses to rob the masses.

>> A friend of mine emailed me today asking me if I know anyone looking for work. His company can't find enough people and they had to cancel a contract because of it. His company does ERP consulting and his consultants earn well into the six figures.

I believe we should raze the occupied McMansions of those who didn't really have the money to be there in the first place and then issue Section 8 vouchers for them to live off the government in the projects. If they are going to live at taxpayer expense then they need to live in Section 8 Housing.

That's an excellent idea, but it would cost the Taxpayer a lot to re-train the McMansion folks to fit into subsidized family Section 8-- 2 bedrooms. One would have to insure they qualified for the programs:

On and/or making and selling drugs---

Filthy Housekeeping 101 would be a must-----

Stacking Junk Tires on Porch Decorating-----

Wife Beating 101 (BTW Lowe's has started selling Quarter Sheets of Sheetrock which is needed to repair fist and head holes in the walls, a savings for the Complex Owners---)

How to make your non-starting, oil leaking car which is parked in your space look servicable, a short course-----

How to convince the Landlord that the Bluelighted Patrol Car was only a friend who stopped by for coffee-------

How to miss the dumpster when you throw your torn plastic trash bags at it while driving by----

A good teacher could do all this in a very short time. Try most any Section 8 Property and they would be glad to do it.

Congrats to the contrarians out there who played this right over the past few days

Keep your stop losses tight, don't get greedy

We'll see down days again, and more failures. But last week was pure straight-out-of-the book panic and liquidation. And the actions of governments across the world last night and today should not be discounted.

Sure thing trader Bob. Get back to us in three months and we'll see how well your investment "strategy" has paid off. Nothing changed since last Friday, not a damn thing, other than central banks around the world handing fiat money out like candy on Halloween. If you think that is a long-term solution then you need to have your head examined.

Weimar Germany, Brazil, and Argentina all saw their stock market indexes soar as they fell into the buzz saw of inflation then hyperinflation. The investors in those economies did well, didn't they?

LET ME SAY AGAIN.. UP ALMOST 1000 pts

YOU MISSED THE BOTTOM -) Thats my ass crack you can kiss my ass if you want.

It's looking to me like auto makers might be a good investment. While Ford saw a 20% increase, GM topped that, at 33%. This would look a lot better coming from a manufacturer, rather than a bank. Let's hope the two companies show some success with their new plug-in hybrid electrics. Folks, I am all for lower house prices. But I also emphasize the importance of our manufacturing.

hmmm, 936 point DOW increase in one day divided by how many billions or trillions of dollars worth of various government bailout commitments announced over the weekend equals how much paid by taxpayers for each single point of increase? ... Not that good at math, someone please help me out here... (sarcasm off now)

"And no, I don't know what's going to happen now that the panic selling is unwinding. But these past few days were classic. Straight out of the book."

LOL - As if it's somehow over because the DJIA popped a cork. This is a (sucker) rally engineered to unload some shares to idiot fund advisors who are believing the calls claiming a bottom and to greedy in-duh-vidual investors trying to earn a few % to salve the wounds of last week.

What has changed in the economies that might justify higher share prices? The banks are still insolvent, mortgages go unpaid, oil is twice the price of a year ago, and unlimited guarantees to banks can't change the fact that the unpaid liabilities if recognized, would add up to an amount far larger than global GDP.

When the Dow plunges 1000+ points in some future session I'm sure Keith will tell us he called it XX months ago.

Investors who shorted financial and insurance companies were doing quite well last week as fears of another financial bankruptcy mounted.

With today's successful save of Morgan Stanley (NYSE: MS), anyone who was short that firm -- or other financial stocks -- was forced to buy those stocks as they spiked in order to repay their stock loans.

Hey, Last week the house and half the foundation got torn away. They are building a gigantic shack on top of the foundation that remains. This will last until the next wind blows!What's worse,,they're building the shack with OUR money!!

i went into the market at 10 minutes before the closing bell on friday and bought a stock i've held before...but with the intention of trading on any rallies. so we get one today...and perhaps tomorrow. i'm sure i'll be out of this stock by friday.

i'm now re-reading MPC by Kindelberger...man, it's like reading a prophecy.

You dimiwits don't get it yet do you? All your end of the world doomsday scenarios simply aren't happening.

Now be good little renters and get back to your tinfoil hat making classes."_______________________________

What the hell are you talking about? Most of the stuff this blog predicted came true.

And by the way, this board is predicting trouble...it's not predicting "the end of the world". Why is it that when someone shows genuine concern for what's going on, they are automatically labeled as "tin foil hat" types?? Why is this society so stupidly optimistic? Why do we act like nothing could ever go wrong?

I am amazed how those verbose few numskulls whose lexicon is limited to “Dimwits" and "Dopes" always pull a Cheney on us and go underground whenever bad news hits them on their thick heads. I haven't heard from them all last week. They cowardly lay low for days until they hear about a fake rally on Wall Street like today’s and then stick their heads out again to display their ignorance.

There is nothing wrong with expressing a different viewpoint, but those idiots never explain why and how they believe they are right. They add nothing to this debate. They must belong to some Sarah Palin circle of monkey spinners whose only assignment is to keep sending those idiotic words to disrupt dissenting blogs like HP!

I bought Canadian Royalty Trusts with a fat yield last week. Many are now up about 20% or so, plus the juicy divy. Our energy problems are not solved, and people will still drive around even when/if we go Mad Max.

Also bought silver over the weekend. Getting darn near impossible to get...

"The essential fact established by yesterday's stock market was that panicky liquidation had been checked and that orders which had been placed by bona fide buyers were having their natural effect. All such hysterical declines as those of the present week are certain to end."

New York Times Thursday, October 31, 1929

After falling 12.8% on Monday October 28 and another 11.7% on Tuesday October 29, the DOW rebounded on Wednesday, October 30 rallying 12.3% and another 5.9% on Thursday October 31.

I'm not going to call this a depression just yet, and I am not going to compare it to the Great Depression. However, following the initial crash, the stock market pared its losses. Though it did end 1929 down 34.8% from it's all time high on September 3, 1929.

Throughout first half of 1930 the stock market posted monthly gains until April even as the economy continued to unwind.

Unemployment crept up from 3.2% in 1929 to 8.7% in 1930 and companies started to fail. It wasn't until April/May of 1930 that the media began to really call this a depression. From searching news articles it seems that many were convinced initially that this would be a mild recession like that of 1924. By mid-1930 many economists seem to allude that the economy was in a depression, but that it would be about the same as that of 1919-1921. The lesson being we won't know this if this is a depression until next year at the very least. We certainly do not know how long this will last.